Carbon-floor price a threat to UK's energy-intensive industries – TPA

18 November 2011 09:00[Source: ICIS news]

LONDON (ICIS)--The ?xml:namespace>UK government’s carbon-floor price plan, announced in 2011, threatens energy-intensive industries, whose costs will rise compared with their EU competitors, the TaxPayers’ Alliance (TPA) said in a report released on Friday.

The TPA, a pressure group that campaigns for lower taxes, said the UK’s largest energy consumers pay up to 10-25% more than those in Germany, and 60-75% more than their counterparts in France, where industry often gets rebates or more substantial discounts on energy costs.

The carbon-floor price will add a further 10% to the energy costs of the UK’s biggest energy consumers by 2020, it added.

“Energy-intensive industries have been successful and growing in Britain. For example, the chemical industry increased production in Britain steadily up to the recent recession,” the TPA said.

“It employs substantial numbers of people, pays large amounts of tax and has been steadily reducing its emissions intensity. If the sectors contract in the face of higher energy costs, particularly relative to our industrial competitors, that will have serious consequences,” it added.

The group said that some companies have made it clear that the carbon-floor price – a tax on companies for the “right” to pollute – threatens billions of poundsof investment, or even the ability to keep major plants open.

The industries that suffer first will be those where energy is the highest share of their costs, and those where reductions in emissions are the most difficult, it said.

The TPA said the Swiss-headquartered petrochemicals major INEOS released figures about the potential impact on its businesses.

INEOS ChlorVinyls faces increased costs of £5m (€5.8m, $7.9m) year rising to a potential £30m a year at 2009 prices by 2020, the TPA said.

“The INEOS business at Grangemouth faces [increased] costs of between £26m and £61m over the same period,” it added.

“The Government needs to be a lot more cautious about ploughing ahead with expensive, unilateral climate policy at a time when it needs industry growing more than ever,” it said.

“Ideally, this policy should be scrapped. Failing that, more credible and substantial measures will need to be introduced to reduce the impact on energy-intensive industry and avoid driving investment, jobs, tax revenues and emissions abroad to little purpose,” the TPA added.